End the War on Freedom

FROM MOUNTAIN MEDIA
FOR IMMEDIATE RELEASE DATED OCT. 13, 2001
THE LIBERTARIAN, By Vin Suprynowicz
No time for panic spending

It took about 10 days for the big spenders in Congress to shake off their momentary deer-in-the-headlight stares after Sept. 11 -- we spent how much on victim disarmament and airport security over the past 30 years ... and all those efforts stopped what percentage of the 19 intended hijackers?

Uh-oh.

Somehow, "box-cutter cooling-off periods" just didn't resonate.

But once they recovered, Messrs. Kennedy and Schumer et al. were quick to see that all manner of bad and previously doomed ideas for increased government meddling in the economy could now be resurrected under the rubric of an "economic stimulus" to help a nation recovering from the terrible terrorist bombings.

Some of the current proposals -- a capital gains tax cut, speeding up the already-scheduled income-tax rate reductions, faster depreciation schedules to encourage business to invest in new equipment -- are sound, because they encourage spending to grow where it will create the most jobs and prosperity, in the private sector.

But increased government highway spending? Raising the minimum wage? These are not short-term stimuli, but steps likely to misallocate resources, growing the federal government -- and its burden on the tax-paying economy -- permanently.

In the face of huge waves of corporate layoffs, when workers' hours are actually worth less to new employers until they learn new skills, it would make far more sense to repeal the unconstitutional minimum wage laws. (Where is Congress given the power to outlaw a willing worker laboring for "too little pay"?)

Writing in the Oct. 10 Wall Street Journal, Nobel laureate economist Milton Friedman calls the porkfat scramble we're now seeing in Washington "crude Keynesianism rising from the dead."

Japan tried to solve its economic problems by piling on more government spending in the '90s, Mr. Friedman points out, creating "stagnation at best, depression at worst, for most of the past decade." Furthermore, "That has been the experience in the U.S. and other countries that have tied to use government spending to jump-start the economy."

"The reason is not far to seek," explains the noted author and senior research fellow at the Hoover Institution. "Extra government spending means less repayment of government debt, or the incurring of more debt. In either case, private individuals have less to spend. Government projects replace private projects. Which are likely to be more productive?"

Even the resuscitation of George McGovern's "reverse income tax" -- the cheerful announcement that checks for $400 and $500 will now be mailed out to "people who didn't get them previously" (non-taxpayers) -- is in fact another huge government boondoggle. Heaven forfend the same amount of extra money had simply been left in our pockets by announcing, say, a six-month hiatus on the collection of the federal taxes on gasoline and tires, or an end to all payroll taxes. Couldn't do that. That might actually put some government tax-collectors out of work, forcing them to find ... you know, real jobs.

The projected federal surplus has already plunged from an August estimate of $176 billion, as Congress quickly allocated $40 billion to respond to the attack, and then an additional $15 billion to bail out an airline industry that allowed Sept. 11 to happen by barring law-abiding passengers from carrying guns.

The remaining surplus will likely vanish if Congress and the White House now follow through on plans to pass a new $60 billion "economic stimulus package."

A temporary new deficit in the face of this crisis may be acceptable. But a lot has been done already -- it will still take months to feel the full impact of the Federal Reserve Board's progressive reduction of the federal funds rate from 6.5 percent to a remarkable 2.5 percent so far this calendar year.

To grab too much coal and stoke it into the federal furnace could "leave an inflationary heritage," Mr. Friedman warns.

But most importantly, "The one sure result ... will be to ratchet up the fraction of national income spent by the federal government. Is a permanently larger federal government the right answer to the terrorist threat?"

Mr. Friedman's question answers itself. This is not the kind of war that will be won through the mass productive of tanks and bombers and battleships. Rather, what is called for is a new look at de-centralizing responsibility for both our defense and our prosperity. President Bush's calls for the American people to remain vigilant here at home already echo the calls of our forefathers for the nation's defense to rest not on standing armies mired in entangling overseas alliances, but rather on a self-reliant people and its ever vigilant citizen militia.

Restoring fiscal discipline and trimming dangerous deficits have taken two decades of hard work -- and consistent pressure from voters, retiring the big spenders of yesteryear. Are we now to throw away all that has been gained -- all the "peace dividend" of our victory in the Cold War -- in a few weeks of inattention and relapse into bad habits?

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Vin Suprynowicz is assistant editorial page editor of the Las Vegas Review-Journal. Subscribe to his monthly newsletter by sending $72 to Privacy Alert, 561 Keystone Ave., Suite 684, Reno, NV 89503 -- or dialing 775-348-8591.

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Vin Suprynowicz, vin@lvrj.com

"When great changes occur in history, when great principles are involved, as a rule the majority are wrong. The minority are right." -- Eugene V. Debs (1855-1926)

"The whole aim of practical politics is to keep the populace alarmed -- and thus clamorous to be led to safety -- by menacing it with an endless series of hobgoblins, all of them imaginary." -- H.L. Mencken

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